All three statements are correct according to NCERT. Statement I is correct because a profit-maximising firm's labour demand curve slopes downward due to diminishing marginal productivity of labour. Statement II is correct because households decide labour supply by balancing income and leisure. Statement III is correct because under perfect competition, firms employ labour until the wage rate equals the Value of Marginal Product of Labour (VMPL). Therefore, Option B is the correct answer.

The market demand curve for labour is obtained by horizontally summing the labour demand curves of all firms. Since each profit-maximising firm hires fewer workers as the wage rate rises (because VMPL declines), the total market demand for labour also slopes downward. Assertion is true. Reason is true. The Reason correctly explains the Assertion. Therefore, Option A is correct.

Initially, a rise in wages encourages individuals to work more because the substitution effect dominates. However, at sufficiently high wage rates, income rises significantly, allowing individuals to afford more leisure. At this stage, the income effect dominates the substitution effect, causing labour supplied to decrease and the individual labour supply curve to bend backward. Option C correctly explains the backward-bending labour supply curve. Option A is incorrect because the opportunity cost of leisure actually increases when wages rise. Option B is incorrect because it is the income effect, not the substitution effect, that dominates at high wages. Option D is incorrect because the backward bend is explained by income and substitution effects, not by work becoming less irksome.

Although an individual's labour supply curve may bend backward due to the dominance of the income effect at high wages, the market labour supply curve is generally upward sloping. This is because an increase in wages encourages more individuals to enter the labour force or previously inactive workers to participate, increasing the total quantity of labour supplied. Option D is correct because the aggregate labour supplied increases as wages rise. Option A is incorrect because market labour supply is not perfectly elastic. Option B is incorrect because market labour supply does not slope downward. Option C is incorrect because labour supply responds to changes in wages.

The correct matching is: 1 → b: A perfectly competitive firm cannot influence the market price and is therefore a price-taker. 2 → a: For a price-taking firm, Value of Marginal Product of Labour (VMPL) equals Marginal Revenue Product of Labour (MRPL) because Marginal Revenue (MR) = Price. 3 → c: Under perfect competition, Marginal Revenue (MR) equals the market price. 4 → d: The wage rate (w) represents the additional (marginal) cost of employing one more unit of labour. Hence, the correct matching is Option A.

Given: qD = 200 − p qS = 120 + p p = 25 Calculate demand: qD = 200 − 25 = 175 Calculate supply: qS = 120 + 25 = 145 Excess Demand: Excess Demand = qD − qS = 175 − 145 = 30 Therefore, the correct answer is Option A. Option A is correct because the excess demand is 30 units. Options B, C, and D do not satisfy the calculation.

In the long run under perfect competition: 1. Price falls below the minimum average cost. 2. Firms begin to incur economic losses. 3. Some firms exit the market. 4. Market supply decreases, causing the market price to rise until it again equals minimum average cost, where firms earn only normal profit. Thus, the correct order is 1 → 2 → 3 → 4. Option D correctly represents the adjustment process. The remaining options disturb the logical sequence.

Under perfect competition with free entry and exit: Statement I is correct because long-run equilibrium occurs where Price = Minimum Average Cost (Min AC). Statement II is incorrect because supernormal profits attract new firms, eliminating excess profits. Statement III is correct because when Price = Minimum AC, firms earn only normal profit. Hence, Statements I and III are correct. Therefore, Option C is the correct answer.

The correct matching is: 1 → d: Demand Left + Supply Left → Quantity decreases, while price depends on the magnitude of the shifts. 2 → b: Demand Right + Supply Right → Quantity increases, while price is uncertain. 3 → a: Demand Left + Supply Right → Price decreases, while quantity is uncertain. 4 → c: Demand Right + Supply Left → Price increases, while quantity is uncertain. Thus, the correct matching is Option B.

A leftward shift of the demand curve indicates a decrease in demand. At the original equilibrium price, consumers now demand a smaller quantity than before, while producers continue supplying the previous quantity. This creates excess supply, which puts downward pressure on price until a new equilibrium is established. Option C correctly describes the market outcome. Option A is incorrect because demand decreases rather than increases. Option B is incorrect because demand no longer equals supply at the initial equilibrium price. Option D is unrelated to the effect of a demand shift.

Given: qD = 200 − p qS = 120 + p Price floor (pf) = 45 Calculate quantity demanded: qD = 200 − 45 = 155 Calculate quantity supplied: qS = 120 + 45 = 165 Excess Supply: Excess Supply = qS − qD = 165 − 155 = 10 Therefore, the correct answer is Option A. Option A is correct because the surplus is 10 units. Options B, C, and D result from incorrect calculations.

When the supply curve shifts rightward while the demand curve remains unchanged, producers supply more at every price. As a result: Equilibrium price decreases. Equilibrium quantity increases. Thus, the market reaches a new equilibrium with lower price and higher quantity supplied (and demanded). Therefore, Option B is correct. Option A is incorrect because price does not rise after an increase in supply. Option C is incorrect because equilibrium price falls rather than rises. Option D is incorrect because equilibrium quantity increases, not decreases.

When the government imposes a price ceiling below the equilibrium price, the following sequence occurs: 1. The government fixes a maximum legal price. 2. Consumers demand more, while producers supply less. 3. Excess demand (shortage) develops. 4. Goods are allocated through rationing, waiting lines, or queues. Thus, the correct sequence is 1 → 2 → 3 → 4. Therefore, Option D is correct.

A price ceiling below equilibrium causes excess demand because consumers wish to buy more while producers supply less. As a result: Statement I is correct because shortages lead to long queues. Statement II is correct because shortages often encourage black markets. Statement III is incorrect because firms reduce output at the lower controlled price, resulting in less supply, not excess supply. Hence, only Statements I and II are correct. Therefore, Option A is correct.

An agricultural price support programme ensures that farmers receive a minimum guaranteed price for their produce. This is achieved by imposing a price floor above the market equilibrium price. If the market price falls below the support price, the government purchases the surplus production to maintain the guaranteed price. Therefore: Option C is correct. Option A is incorrect because a price ceiling is a maximum price, not a support price. Option B refers to the labour market rather than agricultural commodities. Option D is unrelated to government price intervention.

A price floor is the minimum legal price set above the equilibrium price. At this higher price: Producers are encouraged to supply more. Consumers demand less. Consequently, the quantity supplied exceeds the quantity demanded, creating excess supply (surplus). Assertion (A) is true because a price floor creates excess supply. Reason (R) is also true because the higher fixed price leads to greater supply than demand. The Reason correctly explains the Assertion. Therefore, Option D is correct.

The correct matching is: 1 → d: A price ceiling below equilibrium creates excess demand. 2 → c: A price floor imposes a minimum legal price. 3 → b: A minimum wage law above equilibrium creates excess supply of labour (unemployment). 4 → a: Fair Price Shops distribute essential commodities under the rationing system. Thus, the correct answer is Option A.

In analysing long-run equilibrium under perfect competition with free entry and exit, NCERT assumes that all firms are identical. This means they have the same production technology, same cost structure, and equal efficiency. Consequently, all firms face identical average and marginal cost curves. Therefore: Option D is correct. Option A is incorrect because firms are not assumed to have different characteristics. Option B is incorrect because differentiated firms belong to monopolistic competition. Option C is incorrect because monopolistic firms do not satisfy perfect competition assumptions.

The passage explains that the equilibrium wage rate is determined at the point where the labour demand curve intersects the labour supply curve. In the labour market, wages are the price paid for labour. Therefore, the equilibrium wage rate is the market price of labour. Option C correctly identifies the price determined at the intersection. Option A is incorrect because purchasing power is not the market price. Option B is incorrect because marginal product is a productivity concept, not the market price. Option D is incorrect because the cost of leisure influences labour supply but is not the equilibrium price.

The passage states that equilibrium in the labour market occurs when the quantity of labour households wish to supply equals the quantity firms wish to hire. This equality determines the equilibrium quantity of labour and the equilibrium wage rate. Option B exactly matches the statement given in the passage. Option A refers to the labour-leisure choice, not equilibrium quantity. Option C is incorrect because firms do not necessarily demand maximum labour at the minimum wage. Option D is incorrect because equilibrium is not defined by a zero marginal revenue product.